Economists have put the chances of 6pc interest rates this year at one in three, after fresh signs emerged that the Bank of England has lost control of prices and the

Organisation for Economic Co-operation and Development (OECD) said Britain has the worst inflation problem in Western Europe.

George Osborne on Gordon Brown: 'truly incompetent'

The CBI said the number of manufacturers intending to raise prices in the coming months had hit the highest level in 12 years. The news is vitally important since the Bank said last week that if this specific measure continued to rise it would imply that it might have to raise borrowing costs again....../

It cut its 2008 growth forecast for the UK from 2.8pc to 2.5pc, and fired a warning at outgoing Chancellor Gordon Brown, criticising him for building up a bigger budget deficit than any other major European country this year.

George Osborne, the shadow chancellor, said: "It's official: Gordon Brown is leaving the Treasury with the public finances in the worst state in Western Europe. You have to be truly incompetent to combine the

highest taxes in our history with a budget deficit higher even than Italy's."

Gordon's decision to lower rates in August 2005 in order to reverse the trend toward falling house prices has cost the country far more having delayed the inevitable. Now he will have to authorise the muppets to keep on raising rates until they get ahead of inflation. Merv is still well into accommodative territory with inflation at around 7% and rising.

The higher Gordon has to go with rates the more damage he will do to what is left of exports. I think we can say goodbye to Honda soon after Mr Fukui warned yesterday that the pound has caused him to rethink any further investment in Swindon.

Gordon has set us up for a major fall. That he is about to ascend to No. 10 as one of the very few Western unelected heads of state (de facto) is appalling.

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" A leading economics think-tank has upped its forecast for UK growth this year and predicted that the Bank of England will freeze interest rates for the foreseeable future.

In its semi-annual economic outlook published yesterday, the Paris-based Organisation for Economic Co-operation and Development now thinks the economy will expand by 2.7 per cent in 2007 rather than the 2.6 per cent it pencilled in last November. The new forecast, however, remains just below the 2.75 to 3.25 per cent the Chancellor, Gordon Brown, predicted in the Budget.

For 2008, the OECD sees growth easing to 2.5 per cent, down from 2.8 per cent six months ago and at the bottom end of Mr Brown's 2.5 to 3 per cent forecast range.

The report, which was prepared before it emerged that the Bank of England's Monetary Policy Committee considered raising interest rates by an unprecedented half-point earlier this month, expects borrowing costs to remain at their prevailing 5.5 per cent for the rest of the year. It admitted, though, that there were upside risks to that outlook. Another rate rise to 5.75 per cent is seen as odds-on in the City, with some analysts warning that 6 per cent rates are likely.

"The current expansion is well entrenched," the report said, noting that soaring profits had encouraged businesses to invest and helped drive growth in recent quarters. "With business and consumer confidence buoyant, and foreign demand growing rapidly, the outlook for the first half of 2007 looks bright. Overall, the outlook is for growth of 2.5 to 2.75 per cent over the next two years, with little economic slack in the economy."

It identified three main risks to the generally benign scenario, which could prompt higher interest rates. First, labour market bottlenecks could appear as inward migration slows; second, the housing market might fail to slow as expected; and third, the higher cost of living could lead to inflationary pay demands.........."

So they are expecting the housing market to slow - their main worry is that it doesn't, which may force IRs higher.

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" A leading economics think-tank has upped its forecast for UK growth this year and predicted that the Bank of England will freeze interest rates for the foreseeable future.

In its semi-annual economic outlook published yesterday, the Paris-based Organisation for Economic Co-operation and Development now thinks the economy will expand by 2.7 per cent in 2007 rather than the 2.6 per cent it pencilled in last November. The new forecast, however, remains just below the 2.75 to 3.25 per cent the Chancellor, Gordon Brown, predicted in the Budget.

For 2008, the OECD sees growth easing to 2.5 per cent, down from 2.8 per cent six months ago and at the bottom end of Mr Brown's 2.5 to 3 per cent forecast range.

The report, which was prepared before it emerged that the Bank of England's Monetary Policy Committee considered raising interest rates by an unprecedented half-point earlier this month, expects borrowing costs to remain at their prevailing 5.5 per cent for the rest of the year. It admitted, though, that there were upside risks to that outlook. Another rate rise to 5.75 per cent is seen as odds-on in the City, with some analysts warning that 6 per cent rates are likely.

"The current expansion is well entrenched," the report said, noting that soaring profits had encouraged businesses to invest and helped drive growth in recent quarters. "With business and consumer confidence buoyant, and foreign demand growing rapidly, the outlook for the first half of 2007 looks bright. Overall, the outlook is for growth of 2.5 to 2.75 per cent over the next two years, with little economic slack in the economy."

It identified three main risks to the generally benign scenario, which could prompt higher interest rates. First, labour market bottlenecks could appear as inward migration slows; second, the housing market might fail to slow as expected; and third, the higher cost of living could lead to inflationary pay demands.........."

So they are expecting the housing market to slow - their main worry is that it doesn't, which may force IRs higher.

Strange, the first post quotes this from the OECD:

It

cut

its 2008 growth forecast for the UK from 2.8pc to 2.5pc,

and fired a warning at outgoing Chancellor Gordon Brown, criticising him for building up a bigger budget deficit than any other major European country this year.

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Just goes to show what you can get away with if you have an ''Independent'' Bank controlling things.If any Government had managed things with the lunacy the MPC have over the past year Soros and Co would have been waiting in the wings to devour the currency.When will the international money markets get the message,the BOE are a bunch of retards and yes you can have a go at the fiat currency .